Investment banks struggle to kick the leverage habit

European investment banks still look thinly capitalised relative to their US peers – which could be storing up trouble ahead

By

William Wright

Updated: February 18, 2014 6:28 p.m. GMT

One definition of addiction: when you can give something up any time, so long as you don’t have to do so today.

For all of the promises, investment banks have found it hard to kick the habit of high levels of debt and leverage, and as their latest results show, if they do give up the withdrawal symptoms can be unpleasant.

These symptoms - falling profits, low returns and a drag on the valuation of their parent - could yet get...